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Posted:
22-10-10
By Mark Lester
Publisher of
Supertrax International Magazine
All aspects of the motorized powersport business have
been hurt severely by the worldwide economic recession.
At the depth of the last 18 months of economic
contraction, the motorcycle biz was down 52%, ATVs in
Canada approx 30%, in the USA 50%, marine (boats and
watercraft) 50% plus! However, the sno-mo-biz last
season was close to status quo here in Canada and down
marginally in the USA. After enduring and emerging from
the strongest economic downturn in 30 years, it is once
again snowmobiling that appears to be “the darling” of
the motorized recreational powersport industry.
Why?
Strangely, our unique demographic, once thought to be
our ever-increasing weakness, contributed enormously to
the industry’s stability. The average age of a
snowmobile purchaser and participant is much higher than
the vulnerable high 20’s low 40-something ATV
demographic average. Clearly, the financial stability of
an established, committed demographic provided
protection from the severity of the economic downturn.
In fact, as we entered the recession over a year ago,
snowmobiling had definitively posted a solid turnaround
from a near-decade-long sales slide.
The BIG QUESTION we’re fielding from many observers is
this: Is The Canadian Economic Recovery sustainable?
Clearly, the US economy is trailing ours as we emerge
from the depths. The most important element of the
Canada versus US recession comparison is the Sub-Prime
Mortgage Crisis. An event that substantially undermined
the value of real estate for Americans. No equity, no
buying power! Just released stats show the value of
Canadian real estate on average, coast-to-coast, dropped
just 3.5% from June 2008 to June 2009. The US has
experienced drops of up to 30% in many states. Because
mature Canadians (the core of our sno-mo demographic)
have not lost their ability to borrow and buy, our
economy is emerging quicker from the recession. Clearly,
the Canadian economy’s comparative strength and our
stable demographic is the foundation for a stronger
snowmobile industry in Canada. 2009 trail permit sales
underscore how robust the snowmobile business is in an
otherwise troubled economy.
However, one challenge we are saddled with is directly
related to the severe shrinkage of the marine, ATV and
to a lesser degree, the motorcycle market. Dealers this
fall who retail sleds are suffering from the effects of
both a poor economy entering the summer of 2009 and the
effects of a cool and less conducive-to-purchasing-a-fairweather-toy
weather pattern this past summer.
These dealers have to manage their wholesale floor plan
financing to accommodate the seasonal nature of the
powersports biz in Ontario. This means dealers are
struggling with too large marine and in some cases ATV
inventories. Certainly, unsold new boat inventories are
hurting snowmobile dealers who are in both businesses.
While the ATV biz is showing signs of a rebound this
fall, it will take until next year, at least, for the
marine industry to get back on its feet. All of us in
the snowmobile business need to understand this critical
relationship between the recession resilient snowmobile
business and the recession vulnerable marine and ATV
businesses.
So the moral of the story is to support your local
snowmobile dealers this year and you’ll make in-roads in
ways never before possible. How? Clearly, we need OEM
branded snowmobile dealers to help us reach our trail
permit customers and to help support our trail systems.
Snowmobile dealers - for many OFSC clubs - are the
anchor points for club information dissemination, club
activities and permit sales. We expect by this time next
year there will be a significant rationalization in the
powersports business as a result of the marine problems
we’ve just discussed. The unfortunate part of this
rationalization is this: Dealers with strong snowmobile
businesses may be victims of the marine products
downturn this year.
So clubs will need to work closely with their dealers
this season and be more attentive to their needs.
Whatever you can do to help them get over this hump will
come back to you in spades when the economy recovers.
Source: MainTrail, November 2009
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